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FCA fines and bans directors of Sipp advice firm

The FCA has banned two former directors of advice firm TailorMade Independent, which advised clients to invest over £110m in unregulated investments. 

Lloyd Pope has been fined £93,800 and Peter Legerton would have been fined £84,000 if it were not for his financial position. 

TailorMade gave advice on transferring pensions into unregulated investments such as green oil, biofuels, farmland and overseas property via Sipps.

Between 2010 and 2013, 1,661 customers invested £112.4m in these products.

More than half of the firm’s customers invested in overseas property operated by the Harlequin group of companies, which are under investigation by the Serious Fraud Office.

The FCA found Pope and Legerton failed to ensure TailorMade assessed the suitability of investments made through Sipps for its customers, failed to ensure the firm identified and managed its conflicts of interests and failed to oversee properly its compliance function, which had been outsourced to external consultants.

Legerton also benefited financially from poorly managed conflicts of interest between TailorMade and an unregulated firm that introduced new business to TailorMade.

During the relevant period Legerton’s total income from TailorMade was £300,567.

TailorMade has ceased trading and is now in liquidation. The Financial Services Compensation Scheme is investigating claims by its customers after declaring the firm in default in July.

FCA acting director of enforcement and market oversight Georgina Philippou says: “Pope and Legerton exposed customers to risky investments without considering if these products met their needs.

“Their actions mean many customers face losing all of their hard earned pension funds and fell woefully short of the standards we expect of senior individuals.”

In March 2013, the FCA imposed restrictions on TailorMade around the disposal of assets and prevented the firm from carrying out new pensions business.

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. It only took the regulator 6 years to act on adviser concerns on Harlequin! Now the ones left in the industry end up paying higher FSCS fees for the sinners that have left the industry. This system needs changing as far as I am concerned.

  2. Christopher Lean 20th March 2015 at 10:43 am

    I fear there will be a lot more to come. Store pods next?

  3. 6 years – better late than never! Plus the FSCS don’t have 20:20 vision you know (their words not mine); is this because the FCA are their opticians?

  4. Spot on Peter Herd, couldn’t agree more.

  5. Interesting that two of the regulated individuals were banned, but several others have moved on. What’s the story here then MM?
    ARB00038 Mr Alistair Rae Burns Active
    MNC01024 Miss Mary Natalie Hannah Calderbank Active
    PXE00019 Mr Paul Elliott Active
    PCL00008 Mr Peter Charles Legerton Active
    RJM01469 Mr Rodney James Morton Inactive
    LXP00027 Mr Lloyd Arnold Pope Inactive
    RIS00009 Mr Robert Ian Shaw Active
    CLT01060 Miss Cera Lynne Taylor Active

  6. It’s a shame a few bad apples seem to be ruining it for everyone. I feel for good, honest hard working client orientated advisers who seem to have to pick up the pieces/bill for the shameful few.

    Working with SIPP’s is not the easiest angle sometimes due to nonsense investments and providers not doing the needed due dil on them in general. The last few years with the rife liberation to watch out for too has been a pain.

    Just make sure the provider does actually conduct due dil, a good checking point would be to ask them how much non-standard assets they hold within their overall assets. Now that would be an interesting list to see!

    Things are much better now and can only improve……I hope!

  7. I agree with this course of action but of course there are always faults on both sides. Why are investors so keen to put large amount aside in what are obviously higher risk investments? It can only be because they are tempted by the apparent higher rates of return. So greed has played a part in the decision making process of both parties. Then why am I and my clients now being required to subsidise these individuals? I don’t like using the term unfair because life is unfair but we have to get on with it. However the current system is just wrong. Those of us who play the game are being penalised which should not be the case.

  8. Knightly; these products were not marketed at sophisticated investors, or as “obviously higher risk”. Clients were told the returns were effectively guaranteed, and considered to be low risk.

    Having helped pick up the pieces for a member of a corporate pension scheme I deal with, and having seen the documentation provided, the glossy brochures and tales of celebrity endorsement, boiler-room style pressure selling and hidden commissions were all part of a scheme that seemed to aim to line everybody’s pockets other than the investors.

    It us unfortunate that we have a higher FSCS levy to pay thanks to these con-men, but without the comfort of a compensation scheme for clients to fall back on, how much of a financial services industry would there be left?

  9. Earned £300k, fined £90k – decent ROI!

  10. jonathan gamlin 20th March 2015 at 12:57 pm

    Unfortunately this is still going on today . On two occasions recently I’ve been in competition for a pension switch , me offering straightforward regulated funds through platforms , them offering , offshore/onshore property , car parking , store pods and complicated crowd funding or unregulated loan schemes .
    There was an opportunity to clear this up with the review on permitted Sipp investments but as usual this was fudged and avoided . Make all sipp investments regulated only , no nonsense and understandable investments. We shouldn’t gamble with pension funds we shouldn’t chase the 15% commission ! These days are supposed to be behind us or what was RDR all about .
    Don’t get me started on Solo SSAS either !!

  11. @ FinancialWalker

    I agree with what you say, but do you think its gone way past the time for the FCA to look at this a demand a product levy (and I mean now not after 10 years consultation) ? personally I see no real fair alternative !

    Also the FCA need to stop offering “discounts” and “reduced due to financial hardship” on these individuals and companies,

    My clients and myself don’t get the same privileges……

  12. What is absolutely shameful in all of this is the role of the regulator and their total lack of action when not just one or two advisers showed advisers showed concerns over schemes like harlequin but a chorus of individuals were ignored.

    We are now seeing our viewpoints on pension freedom also ignored in the area of authorisation to give financial advice. Is it not surprising that the general public get ripped off when basic rules and regulations are not enforced and when advisers do whistleblow are not taken any notice of.

    I would like to see a major enquiry into unregulated products and for once the FSA now FCA not to hide behind its wall of secrecy which is often used to cover up its gross misconduct. Harlequin has potentially cost the profession £300m and TailorMade and others were at the centre of this scandal.

  13. I have reported suspicious activities to the regulator and can’t say I am impressed by the sense of urgency inspired. The local trading standards office was much more communicative and proactive in one case. Albeit the FCA did eventually issue a warning notice without advising me, of course. Notwithstanding @FinancialWalker’s comments I am still of the opinion that the investor must take some of the blame. I have never been impressed by “glossies” and maybe that’s why I have never needed to claim compensation from anybody. Let’s face it these people were investing large sums of money so there has to be an assumption they are pretty smart individuals to have accumulated such to invest. So I have to assume greed played a part in their decision to invest. “Greed is good” – maybe but I don’t expect to subsidise it. There has to be a more equitable answer and I agree a product levy is one alternative.

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